IHO Reform

The inclusionary housing ordinance is designed to complement a market-oriented approach to increase the affordable housing supply. While encouraging more housing supply will moderate rents, it will not happen overnight. As a result, we believe that sound housing policy should require developers to share in our vision of a more affordable community by including affordable units in each development. Most progressive cities pair inclusionary housing ordinances with revisions to local zoning codes. 

Our neighbors, including Evanston, Highland Park, and Chicago, all have progressive housing ordinances that they periodically revise to remain responsive to local market conditions. The State of Illinois also believes this is an effective tool to encourage affordability and has developed a strong tax incentive program for communities, like ours, that are designated “low affordability.”

This revised inclusionary housing ordinance (IHO) proposal is in response to the current IHO proposal adopted in 2019 to:

• Align with County Affordability Efforts. This proposal aligns with Cook County affordability property tax incentives to maximize benefits for developers.  As a community designated as “low affordability” by IHDA (IL Housing Development Authority), Oak Park should capitalize on statewide efforts. As such, we recommend lowering the threshold of eligible buildings from 25 units to 7 units, to align with the County’s minimum unit threshold requirement to access tax benefits. 

• Prioritize Racial Integration Village Wide. Expands IHO coverage to all of Oak Park. Per the Metropolitan Mayors Caucus (MMC) report commissioned by the Village, variety in housing options and prices determines the level of racial integration at the neighborhood level: the greater the variety within a census tract, the greater the racial diversity.  Black, and to a lesser extent, Latino, households are underrepresented in neighborhoods in Oak Park that lack diversity in housing options, especially where few multifamily developments exist.

• Require a Market Rate in Lieu-of-Fee. The new fees should incentivize on-site development and reflect the market-rate costs to build a new unit. To date, the IHO has resulted in zero affordable units on-site (unless they were already mandated by funding sources like 801 Oak Park). Oak Park’s in lieu-of-fees were set too low to incentivize on-site units, so low in fact that the Michigan Avenue Real Estate Group (MAREG) contributed an additional $150,000 (across two projects) in addition to their required amount, indicating a willingness in the market to pay above the current fees.

• Increase Supply of Affordable Units. The updated IHO would directly increase the supply of affordable housing by increasing the share of total units in a building  (“coverage”) that must be affordable from 10% to 20% for 1 and 2 BDRs and 30% for building projects utilizing public funding. (Note: A major 2020 white paper by Fannie Mae reviewing over 1,000 IHOs across the country documented that 29% of these IHO  programs required set-aside units of 20% or more.)

• Incentivizes Family Unit. There is a need for family housing and the IHO does not currently encourage family-sized units. The updated IHO would incentivize housing for families by lowering the share of total units in a building  (“coverage”) that must be affordable if the affordable units are larger: our proposal requires 15% coverage if units are 3+ bedrooms and 20% coverage for 1 and 2 unit bedrooms. 

A note on affordability period: there are several options to ensure units remain affordable. The Village could look into longer deed restrictions or revise and expand the triggers for the application of the IHO, for example when substantial/gut renovations take place or a sale of a property. A limited affordability period will simply create an affordability crisis at a future date.

Developer Incentives

Strong incentives for developers are essential to ensuring a strong IHO. The MMC report recommends the Village strengthen its density bonus and parking requirements. We recommend the Village review its current incentives for density, FAR and parking to ensure these are competitive.

Management and Measurement

Due to income certification requirements, Oak Park should enlist a third-party provider (such as Community Partners for Affordable Housing) to ensure fidelity with the program. Additionally, the Village should collect data and feedback on the IHO process and housing outcomes to enable the Board and residents to assess the effectiveness of the program in reaching its goals and identifying opportunities for improvement.  A racial equity lens (racial equity impact assessment) must be part of the annual review.